NEW DELHI: A lower quantitative easing by the US Federal Reserve is likely to help India as it will enable the RBI to pull down rates by curtailing "imported" inflation, Bank of America Merrill Lynch said in a report.

The minutes of the Fed's December meeting, however, revealed some "worries" about continued quantitative easing.

About half of its officials expressed the view that quantitative easing could be scaled back or stopped during 2013, if the economy improves and unemployment figure drops.

The Federal Open Market Committee (FOMC) voters in 2013 are likely to be more dovish than in 2012 and accordingly BofA Merrill Lynch expect the Fed to put in around USD 85 billion a month through 2013.

On RBI's tight monetary policy, the report said, the tightening has increasingly turned counterproductive in hurting growth rather than denting inflation, which is largely driven by high global liquidity rather than domestic demand.

Reserve Bank has resisted a widespread call for the growth-propping rate cuts for some time now, citing the elevated inflation.

The Indian rupee is likely to remain weak for the next two-three years as the current account deficit is likely to remain high till 2015.

On Rupee BofA ML said "we do not expect the current account deficit to narrow to our estimated sustainable 2.5 per cent of GDP till 2015 when US economists expect growth to revive sufficiently for the Fed to start to hike rates."

Accordingly, the rupee is likely to rule structurally weak for the next 2-3 years, the report said.